Are You Buying a Business or a Job?
Are You Buying a Business or a Job?
Let’s say you are looking to get into the house cleaning business. It’s a great business model that includes getting paid on the spot or at worst weekly. Cash flow isn’t an issue and the right location is truly unaffected by the economy. Sounds great right? Well, the next thing to decide is whether or not you plan on actually picking up a duster and vacuum to personally take part in cleaning.
The obvious answer would be; “No, I do not plan on cleaning houses. I will run/manage the business”. You say that now while reading this article, but if you don’t have this very crucial fact in your head before you start looking at established businesses to purchase, you may get caught up in the moment of a “good buy”. In the end you will be running the show and being part of a cleaning crew. So you ended up a business and a job. Congratulations.
A truly challenging but potentially lucrative business segment is anything dealing with food such as delis and restaurants. And not purchasing a job is almost impossibility. That is unless you have the ability to purchase a very well established and very profitable business where the current owner has done the very rare and difficult task of getting this type of heavily cash based business to hum along with true (and trustworthy) management in place.
This is most often seen with someone that owns multiple restaurants (to own more than one this is a must with a time intensive business like this) or has a fairly large family presence working in the business. By the way, lots of the Seller’s family working in any type of business you are looking to purchase is a bad thing. The odds of them sticking around or you wanting them to stick around is rare. This will leave you holding the bag in filling the many gaps they leave.
Although not the scope of this article, this type of situation would prompt a major reduction in the offer price on your part. Any advisor would have forewarned the Seller that an adjustment should have been made upon the decision to sell regarding reducing family on the payroll. Now that you know this, you will realize that mistake quickly and use it to your advantage if the business is worth purchasing. Just like with any other monetary shortcut to keep more cash in your pocket, when you go to sell, it will all catch up to you.
So, getting back to the actual point of this piece, some industries are inherently more job like. Some are impossible to be anything but the owner and not your own employee. Many or what you make of them though.
My definition of buying a job would be the necessity for you, as the owner, to work more than 5 days a week or more than 40 hours a week. The inability to ever leave the business open and running while you go on vacation. The need for you to work in the trenches instead of performing high-level management and planning. Even the need for you to be the main salesperson is buying yourself a job.
Let me be perfectly blunt with you. This is coming from someone that has owned a variety of businesses in different industries, bought and started from scratch. Unless you know you can take a business you are looking to purchase to the level where you are the actual owner and not also an employee of yourself in only a few years, don’t bother. Even if you are considering the restaurant business. I promise that you will be setting yourself up for a very time intensive and stressful business life.
Allow me to give you one more piece of advice straight from me and from talking to others that I have helped development an exit plan or helped to actually sell their business. Owning a business and working the same or more than you did while you were someone else’s employee is not “ok” because you are your own boss. It only takes a year or two for that euphoria of being on your own to take a back seat to “I’m doing twice the work I used to do with ten times the responsibility and half the pay”.
The minority of owners that never get out of this way of dealing with their business keep doing it because they love what they do. Most of the rest continue on because it takes care of their families so they toil away for as long as they can and try to save for a retirement. Some have the skewed notion that after 30 years in business, they can sell it for big bucks and retire on that. If you paid attention to all that you’ve just read, you will realize that a smart Buyer like you is going to give this Seller a rude awakening on how much his business/job is really worth.
Now why would you buy a business to step into that lifestyle? A start-up is an entirely different animal and you have no choice but to wear many hats and work double time until you have the infrastructure and revenue to bring on employees to remove those hats. You are not starting a business; you are buying an “established” one. Do not confuse the two scenarios. If you want to buy a job I strongly suggest you save your money and keep your job. Otherwise look into putting that money into a brand new business.
So let’s recap here. When looking into a particular business to buy, it should have one of two criteria:
Either you are buying more of a job that you think you can turn into business in 2 years or less using the infrastructure and momentum of the current business. This can be by choice to get a cheaper business and use your money to get to the next level/hire more people or it could be a necessity due to your available fund/funding options.
The other scenario is you are buying a business where the owner does not work in the trenches, including not being the top of the sales force food chain, but he/she is the chief operator and high-level thinker.
Keep this in mind and buy yourself a great business.
Are You Buying a Business or a Job - To learn more about this author, visit George J Sierchio's Website.
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It’s amazing what a difference it makes to ask yourself the question “Do I want to buy a business or a job” when preparing to buy a business. To make sure you understand what I mean, let me briefly explain.
Let’s say you are looking to get into the house cleaning business. It’s a great business model that includes getting paid on the spot or at worst weekly. Cash flow isn’t an issue and the right location is truly unaffected by the economy. Sounds great right? Well, the next thing to decide is whether or not you plan on actually picking up a duster and vacuum to personally take part in cleaning.
The obvious answer would be; “No, I do not plan on cleaning houses. I will run/manage the business”. You say that now while reading this article, but if you don’t have this very crucial fact in your head before you start looking at established businesses to purchase, you may get caught up in the moment of a “good buy”. In the end you will be running the show and being part of a cleaning crew. So you ended up a business and a job. Congratulations.
A truly challenging but potentially lucrative business segment is anything dealing with food such as delis and restaurants. And not purchasing a job is almost impossibility. That is unless you have the ability to purchase a very well established and very profitable business where the current owner has done the very rare and difficult task of getting this type of heavily cash based business to hum along with true (and trustworthy) management in place.
This is most often seen with someone that owns multiple restaurants (to own more than one this is a must with a time intensive business like this) or has a fairly large family presence working in the business. By the way, lots of the Seller’s family working in any type of business you are looking to purchase is a bad thing. The odds of them sticking around or you wanting them to stick around is rare. This will leave you holding the bag in filling the many gaps they leave.
Although not the scope of this article, this type of situation would prompt a major reduction in the offer price on your part. Any advisor would have forewarned the Seller that an adjustment should have been made upon the decision to sell regarding reducing family on the payroll. Now that you know this, you will realize that mistake quickly and use it to your advantage if the business is worth purchasing. Just like with any other monetary shortcut to keep more cash in your pocket, when you go to sell, it will all catch up to you.
So, getting back to the actual point of this piece, some industries are inherently more job like. Some are impossible to be anything but the owner and not your own employee. Many or what you make of them though.
My definition of buying a job would be the necessity for you, as the owner, to work more than 5 days a week or more than 40 hours a week. The inability to ever leave the business open and running while you go on vacation. The need for you to work in the trenches instead of performing high-level management and planning. Even the need for you to be the main salesperson is buying yourself a job.
Let me be perfectly blunt with you. This is coming from someone that has owned a variety of businesses in different industries, bought and started from scratch. Unless you know you can take a business you are looking to purchase to the level where you are the actual owner and not also an employee of yourself in only a few years, don’t bother. Even if you are considering the restaurant business. I promise that you will be setting yourself up for a very time intensive and stressful business life.
Allow me to give you one more piece of advice straight from me and from talking to others that I have helped development an exit plan or helped to actually sell their business. Owning a business and working the same or more than you did while you were someone else’s employee is not “ok” because you are your own boss. It only takes a year or two for that euphoria of being on your own to take a back seat to “I’m doing twice the work I used to do with ten times the responsibility and half the pay”.
The minority of owners that never get out of this way of dealing with their business keep doing it because they love what they do. Most of the rest continue on because it takes care of their families so they toil away for as long as they can and try to save for a retirement. Some have the skewed notion that after 30 years in business, they can sell it for big bucks and retire on that. If you paid attention to all that you’ve just read, you will realize that a smart Buyer like you is going to give this Seller a rude awakening on how much his business/job is really worth.
Now why would you buy a business to step into that lifestyle? A start-up is an entirely different animal and you have no choice but to wear many hats and work double time until you have the infrastructure and revenue to bring on employees to remove those hats. You are not starting a business; you are buying an “established” one. Do not confuse the two scenarios. If you want to buy a job I strongly suggest you save your money and keep your job. Otherwise look into putting that money into a brand new business.
So let’s recap here. When looking into a particular business to buy, it should have one of two criteria:
Either you are buying more of a job that you think you can turn into business in 2 years or less using the infrastructure and momentum of the current business. This can be by choice to get a cheaper business and use your money to get to the next level/hire more people or it could be a necessity due to your available fund/funding options.
The other scenario is you are buying a business where the owner does not work in the trenches, including not being the top of the sales force food chain, but he/she is the chief operator and high-level thinker.
Keep this in mind and buy yourself a great business.
Are You Buying a Business or a Job - To learn more about this author, visit George J Sierchio's Website.
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Staging DivaDebra Gould, aka The Staging Diva®, is President of Six Elements Inc., an internationally recognized home staging company. Inspired by many requests from aspiring home stagers wanting to start similar businesses, Gould created the Staging Diva Home Staging Business Training Program. Gould has trained over 1000 Staging Diva Graduates worldwide to start staging businesses. Buying decorating and selling six of her own homes in four years lead to an interest in real estate staging which she turned into a career with the launch of sixelements.com in 2002. Since then she has staged hundreds of homes in addition to teaching home staging training. Gould is the author of several home staging resources including a series of popular ebooks made up of a Design Guide, Color Guide and Portfolio Guide. For more information about Debra Gould visit stagingdiva.com. - Visit Staging Diva's Website |
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David BarrDavid Barr is the President of Venture Opportunities, Inc. David has been a professional business broker/intermediary since 1980 focusing on General Business Brokerage and Mergers and Acquisitions representing client transaction value from $400,000 to $20,000,000. Mr. Barr has handled the sale of over four hundred and fifty companies. David earned a university degree from the State University of New York majoring in economics and business. David holds the Mergers and Acquisition Master Intermediary and the Certified Business Intermediary designations from the International Business Brokers Association. He is also a Senior Business Analyst and a Texas licensed Real Estate Agent. For more information about David and Venture Opportunities, visit www.bizdealmaker.com. - Visit David Barr's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
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David AchesonDavid Acheson is the founder of DCJA Consultancy. DCJA Consultancy is a management consultancy business specialising in B2B sales consultancy. They offer bespoke and packaged sales consultancy including Sales Optimisation Review, Interim Sales Management, Sales & Marketing Review, 1:1 Sales & Management Staff Analysis, Management Training, Solution Sales Training, Creation of New Pay Plan, KPI's, run Customer Feedback Campaigns, assist with Recruitment, Coaching, Appraisals and set up Strategic Marketing Campaigns. David spent his early career in accountancy and then moved into sales in 1982, working in Office Equipment, IT, Advertising, Training, Outsourcing and Consultancy. He has held many Senior Positions in SMBs and Global Organisations including Head of Sales Operations & Head of Business Development. His knowledge, skills and great experience of the Sales Industry has led to David making keynote speeches and running educational sessions to key businesses through organisations including The Chamber of Commerce and Business Link. - Visit David Acheson's Website |
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Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
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George J Sierchio Video - George J Sierchio - There are a few reliable sources of finding businesses for sale. There are also some awful sources. Take a look at my tips on how to best find a business to buy.
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